The Barometer’s students often explain that they are not entirely forthright during their job interviews. They expect to move on withint a few years from their “starter” jobs, but, say they, “We always tell the recruiter how we plan to be a lifer.” Their theory is that they can make more money by job-hopping and taking the next better offer. Wait, just a moment. What about the ethical issues here?
Never mind the ethics – sometimes ROI (i.e., those numbers) supports the ethical choice and back up the ethical value of loyalty. The students’ theory on how to make more money may be just that – theory. New studies indicate that loyalty does have significant ROI for employees. The work of Kathryn Shaw of Stanford and her colleagues indicates that the bulk of wage growth among 50,000 software employees comes from staying with one employer, not through job-hopping. Those with single employer experience had wage growth of about 8% per year whereas the job-hoppers averaged about 5% per year. Dr. Shaw found similar results with a different level of worker (windshield installers). “Reaching for the Stars: Who pays for Talent in Innovative Industries?” (with Fredrik Andersson, Matthew Freedman, John Haltiwanger, Julia Lane), 119 Economic Journal 308-332 (2009).
Loyalty has its benefits in sports. The Miami Heat could tell a tale or two about that, with LeBron serving as narrator, but the Wall Street Journal’s football statistician has the data to show loyalty matters. While players may perform better for the first year after they hop to a different team, players who stay with a team for five years or more actually have better statistical performances. Shirley S. Wang, “A Healthy Dose of Loyalty,” Wall Street Journal, June 21, 2011, p. D1.
Other research points to benefits for companies that retain employees – creativity doesn’t come from new blood. Creativity comes from established teams whose members are comfortable enough with each other to go out on a limb with the brainstorming process. Work to retain employees. Those pay raises halt the wandering eye and tempting interviews. Raises have ROI: enhanced creativity.